Agriculture Committee on March 10th, 2009

[The Chair, Conservative, Larry Miller]

I call our meeting to order.

I'd like to thank our guests for being here today.

I'm going to work from my sheet. Could you keep your presentations to 10 minutes or less per organization, as we have a number of guests here today? Then we can get on with our questioning.

We'll start with Mr. Gillespie, who will speak on behalf of the Beef Information Centre.

[John Gillespie, Chairman, Beef Information Centre]

Thank you, Mr. Chairman.

My name is John Gillespie, and I'm the chairman of the Beef Information Centre for Canada. This is a committee of the Canadian Cattlemen's Association. We represent 80,000 beef producers in Canada.

BIC's job is to promote and do market research for the cattle and beef business in Canada and the United States. They are our two important markets.

BIC works directly with packers, further processors, distributors, retailers, food service operators, key stakeholders, and such influencers as health professionals, media, and the government.

BIC's vision is of a sustainable and profitable beef industry, in which Canadian beef is recognized as the most outstanding by both domestic and export customers. Our mission is to maximize the demand for Canadian beef and to optimize the value of Canadian beef products and get the greatest return possible back to the farm gate.

BIC is overseen by an elected committee of beef producers from across Canada and is funded by a check-off from each individual animal sold.

The Canadian domestic market continues to be the largest and most stable market for Canadian beef. In 2007, 65% of Canadian beef production was consumed domestically, while 35% was exported. Canadian beef consumption has remained stable over the last nine years. Beef demand, which measures the relationship between volume of beef consumed and the price consumers are willing to pay, also has been stable during the past decade. In 2007, just over one million tonnes of beef was consumed in Canada. Approximately 80% was Canadian beef. Consumer confidence in the safety of Canadian beef has also remained strong and stable, despite BSE and other food challenges, such as E. coli and listeria.

Quarterly tracking of consumer confidence shows that Canadians' confidence in beef safety is equal to or greater than our pre-BSE levels, which, of course, was in 2003. We have seen significant increases in the amount of U.S. beef being imported into Canada, however. This is primarily due to tightened supplies as a result of economic factors such as higher labour and processing costs in Canada, which make Canadian beef processors less competitive than their U.S. counterparts.

The Canadian beef industry is working cooperatively to identify and develop the quality attributes and points of differentiation, compared to other proteins, that will position Canadian beef as strongly as possible in the domestic and export markets. The strategy is key to addressing our competitive issues. These points of differentiation include quality attributes such as superior genetics, excellent animal health management, individual animal identification, a world-renowned food safety system, superior grading standards, excellent supply capability, and improved profitability for our customers.

As part of this initiative, a new Canadian beef brand has been developed for both the domestic and international markets. The new Canadian brand will be used to build awareness of Canadian beef's unique attributes among customers and consumers. It will capitalize on our strong consumer loyalty in the domestic market. The Canadian beef industry is aggressively moving forward with a new Canadian beef brand identity, and many key retail and food service customers are beginning to incorporate this brand identity into their marketing program.

The Canadian government can significantly assist the beef industry's efforts by creating a supportive regulatory environment that allows the industry to move forward with a number of key initiatives.

Concerning supplemental quota, Canada currently allows 76,000 tonnes of non-NAFTA beef to be imported tariff-free. This is predominantly non-fed beef, or what we might call industrial beef, that's used for manufacturing purposes. Pre-BSE, the Canadian government would routinely allow supplemental tariff-free beef imports. During BSE, this practice was halted to help ensure market opportunities for mature cattle within the domestic market. Consequently, Canadian processors have adapted to take advantage of the domestic supply of mature cattle--cattle over 30 months of age--and have lessened their dependence on offshore grass-fed cattle.Canadian market share in this segment has grown from a pre-BSE level of 25% to approximately 80% market share today. As export markets for Canadian beef continue to open, it is important, in order to safeguard our domestic supply, that government not return to the practice of allowing supplemental tariff-free imports.

The misrepresentation of imported product as Canadian continues to be a concern for Canadian cattle producers. Our industry has worked diligently to develop a marketplace that prefers and rewards Canadian beef. While the new voluntary “product of Canada” guidelines offer welcome improvements for identifying Canadian products, they cannot work if not adequately communicated and enforced by government.

Historically there has been minimal enforcement of labelling requirements and little concern for the consequences of breaking the law. If the Canadian beef industry is going to work to create improved market opportunities and returns through differentiation of our products based on quality and safety attributes, it is imperative that government safeguard these investments through adequate enforcement of labelling laws.

The United States is the world's largest beef-consuming nation and the world's largest importer of high-quality beef. The United States is also Canada's largest and best export market, accounting for approximately 78% of our exports from Canada. While BSE and country-of-origin labelling, or COOL, as many of us have called it, have impacted beef and cattle trade, the U.S. market continues to offer the highest-value market, with the least amount of import barriers for Canadian beef.

BIC works with U.S. trade clients to mitigate the impact of the COOL program and build awareness of the advantages of Canadian beef. BIC's approach has been to align with Canadian packers and U.S. distributor partners to communicate Canada's key points of differentiation and to provide educational resources and market development support that leverage our comparative advantages.

A number of farm groups, including the Canadian Cattlemen's Association, have spoken to this committee at length about the challenges of COOL. U.S. COOL legislation is negatively impacting Canadian exports of beef and live cattle by introducing additional costs through segregation, labelling requirements, and uncertainty of following the published rule versus the more restrictive voluntary guidelines, as was recommended by U.S. Secretary of Agriculture Vilsack. BIC echoes the view of CCA that the Canadian government undertake all available actions, including the resumption of the WTO challenge, to address this COOL situation.

One of the difficulties facing the beef industry is that check-off revenue available to beef marketing organizations has decreased, while the challenges that need to be addressed continue to increase. Typically, domestic marketing activities have been ineligible for funding support through such programs as CAFI. BIC suggests the government consider making domestic marketing initiatives eligible for funding for agricultural sectors in distress.

In conclusion, Mr. Chairman, the Canadian beef industry is working hard to identify and develop the quality attributes and points of differentiation that will position Canadian beef as strongly as possible in both the domestic and export markets. This strategy is key to addressing our competitive issues and creating an environment that will allow Canadian beef cattle producers to be financially successful.

Mr. Chairman, I'd be more than willing to entertain some questions, if you like.

[The Chair, Conservative, Larry Miller]

Okay. Thanks, Mr. Gillespie.

We now have Mr. Brian Read and Mr. Jim Laws from the Canadian Meat Council.

Go ahead, gentlemen. You have ten minutes.

[James Laws, Executive Director, Canadian Meat Council]

Good morning, everyone. Thank you for inviting us to speak before you.

My name is Jim Laws. I'm the executive director of the Canadian Meat Council. With me today is Mr. Brian Read. He is the chair of our beef committee and also the general manager of Colbex-Levinoff, a beef cattle slaughter facility in Wendover, Quebec.

As Canada's national trade association for the meat industry, the Canadian Meat Council has been representing Canada's meat industry for over 90 years. We have 43 regular members, who operate 134 federally registered establishments across Canada. We also have 70 associate members, who provide supplies and services to the sector.

Our sector is the largest of the food processing industries, employing some 67,000 people, with gross sales of over $20.3 billion. In 2008, Canada exported 393,000 tonnes of beef, valued at almost $1.4 billion, to 63 countries. More importantly, Canada exported 194,000 tonnes of pork, valued at over $2.74 billion, to 107 countries.

Canada's meat sector, as you all know, has been challenged by several major events over the past few years, from BSE in 2003, to avian influenza, to an E. coli event that was related back to a producer in Alberta that took down the Topps Meat Company in the U.S.A., to, most recently, in the summer of 2008, a rare listeria outbreak at one facility in Toronto. The Canadian Meat Council offers its full support to the work of the independent investigator and to the House of Commons subcommittee on food safety, which are reviewing this listeria outbreak. We look forward to answering their questions and offering them our comments.

We are grateful to the Government of Canada for its announcement in budget 2009 to provide $50 million over the next three years to strengthen slaughterhouse capacity. We view this as an opportunity to improve overall efficiencies. We know our industry needs to grow its scale and improve productivity to compete successfully with the best in the world and, in particular, with our neighbours to the south.

After BSE, our beef sector invested millions of dollars to increase capacity to process surplus animals that could no longer be exported to the United States. Capacity grew from 75,000 animals per week to well over 100,000 animals per week. Now that the U.S. border is open to all Canadian cattle born after March 1999, Canada's beef plant use has fallen off. Last year 63,000 animals were processed per week, on average. We operate in a North American marketplace, and the processing of livestock will continue to flow where the costs are the lowest and the sales of meat are the highest.

Similarly, the capacity at hog slaughter facilities in Canada has increased and consolidated. Maple Leaf Foods has doubled its shift in Brandon, Manitoba, and as we know, Olymel, Red Deer, has readied for that capacity as well. We know that capacity is currently available; however, there are several worthwhile projects to enhance the sustainability and competitiveness of the meat sector.

One ongoing issue that continues to plague the competitiveness of the sector is the enhanced ruminant feed ban. In July of 2007, Canada's enhanced ruminant feed ban regulations came into effect. They imposed tremendous additional costs on our industry, and we are very disappointed that our advocacy efforts to have a special program to help defray the costs of disposal have not yet been answered. We all know that one of our farmer-controlled cow slaughter members, Gencor Foods, closed its doors and declared bankruptcy on April 1, 2008, citing the high cost of this regulatory compliance with SRM disposal as one of the main reasons for its demise.

On April 27, 2009, the U.S.A. will put in place its new enhanced ruminant feed ban. They will focus only on those specified risk materials from older, higher-risk animals. The U.S.A. may also get negligible risk at the OIE shortly and distance themselves from Canada.

Food safety continues to be the number one priority of the meat sector. Controlling bacteria, such as E. coli O157, involves a huge investment. We know, for instance, that an average packer spends over $5 per head on food safety initiatives, such as steam, lactic acid sprays, and other processing aids. We greatly appreciate the Government of Canada recently approving some additional food safety aids.

We believe food safety upgrades should be eligible upgrades in terms of this new $50-million program. The needs for improvement and modernization are ongoing.

We also appreciate the Government of Canada's accelerated capital cost allowance for manufacturing machinery and equipment depreciation, which the government announced in 2008, that also allows companies to purchase equipment and write off those expenses to become more competitive.

Government policies such as these, that benefit the entire industry regardless of their regional location, are the ones that help make our industry globally competitive.

With regard to meat inspection fees at federally inspected facilities, we paid over $21.4 million in meat inspection fees at federally inspected facilities in Canada last year. And these fees are imposed on meat packers in Canada, in addition to the growing cost that we're faced with in terms of complying with new HACCP-based inspection programs, the compliance verification system, and the significant increase in mandatory pathogen testing requirements that we're faced with.

Meat inspection fees are a competitive disadvantage to Canadian federally inspected meat processors. American meat processors pay no regular-time meat inspection fees, only overtime fees, and provincially inspected meat processors pay no meat inspection fees.

We are grateful, though, to the government and to CFI. We are in a CFI working group on user fees, and they have now, I believe, submitted their final report in which it's recommended that there no longer be regular-time meat inspection fees. We hope that's adopted. We encourage the government to move forward with that. And we very much appreciate the Government of Canada's fee remission that was given last year for over $2 million back to the red meat slaughter sector.

We also fully support the Government of Canada's submission to the Government of the United States in protest to the mandatory country-of-origin labelling and its subsequent notice of the WTO challenge. The final rule as published did provide added workable flexibility that has much improved the fate of Canadian meat and livestock producers from the interim final rule. However, the recent letter to industry that Agriculture Secretary Vilsack wrote, asking for voluntary compliance with more stringent labelling requirements, causes us some concern. But we are hopeful that they will stick to the final letter of the law.

We also appreciate the Government of Canada's ongoing efforts to find bilateral trade agreements, especially with the European Union. With a population of over 500 million people, we believe this market has the opportunity to exceed the demand from the United States for both beef and pork products. We strongly encourage you to move forward with that.

As well, of course, we continue to request a strong deal at the WTO. However, we appreciate the bilateral agreements that this government has been seeking.

We also most recently were disrupted by a looming strike at shipping ports in British Columbia in January 2009. We understand recently that this strike has been averted. However, we encourage you to pass legislation that would include meat in the perishable commodities that should be protected by law should a strike close down our western Canadian shipping ports.

Finally, under human resources availability, we are very grateful for the Government of Canada's extension of the temporary foreign worker program from 12 to 24 months. We're pleased that in the province of Quebec, through the Comité sectoriel de main-d’œuvre en transformation alimentaire, the process is moving forward, and the program will be available to meat processors in Quebec. We're pleased with that.

Thank you very much for your time. We look forward to your questions.

[The Chair, Conservative, Larry Miller]

Thanks very much, Jim, for keeping under the time.

Now from the Canada Beef Export Foundation, we have Mr. Ted Haney and Mr. Gib Drury.

Carry on, gentlemen.

[Ted Haney, President, Canada Beef Export Federation]

My name is Ted Haney. I'm president of Canada Beef Export Federation, and with me is Gib Drury, our board chair and a producer from the province of Quebec.

Mr. Chairman, honourable members, thank you for giving us the opportunity to present to you today.

The Canada Beef Export Federation is an independent, non-profit association established in 1989 to build export demand for Canadian beef in the global marketplace. Since then, we've established local representation in the markets of Japan, South Korea, Taiwan, Hong Kong, mainland China, and Mexico. Today, the federation's 48 members represent over 90% of the Canadian cattle and beef industry, from Quebec through British Columbia. Our stability of membership through the last five and a half difficult years clearly speaks to our industry's unwavering commitment to the international export marketplace.

The competitive advantage of Canada beef is created through the entire industry's working together to increase worldwide recognition and demand for Canadian beef and veal products, long-standing under the Canadian beef advantage brand. Its role is to coordinate strategies and fund export initiatives. The federation delivers the following primary services: market identification and competitive intelligence, market access and trade advocacy, local representation and international market services, and beef promotion in strategic and emerging markets.

The federation delivered 404 individual export development projects during our last fiscal year, averaging more than one completion every single day. These projects are grouped under the following primary programs: partner programs, where we work cooperatively with individual exporters, 41 projects; member information and liaison,16 projects; 10 pieces of market research; 7 incoming VIP beef buyers missions; 31 Canadian beef seminars; 108 retail and food service promotions for Canadian beef in international markets; 20 food shows; 85 unique pieces of promotional material; 10 newsletters; and 76 specific projects in advertising and public relations.

We know that these programs are vital and relevant, as Canadian beef and veal exporters attribute 23% of their total trade to Asia and Mexico to the federation's programs and services.

The federation, backed with private and public sector resources, invested almost $8 million in export programs last year. The federation was able to leverage $20 million of additional export-oriented capital and marketing investments from its export members over the past five years, creating almost 200 new high-quality manufacturing jobs and protecting thousands of jobs.

The measure of success of the federation's market development program is the export growth our industry was enjoying prior to the closure of world markets in May of 2003. Canadian beef exports to the world rose from 94,000 tonnes, or $260 million, in 1990 to 521,000 tonnes, or $2.2 billion, in 2002. From its first full year of operations in 1990 to the last complete pre-BSE year of 2002, exports of Canadian beef to markets outside the United States increased from just 9,000 tonnes, under $30 million, to 158,000 tonnes, $540 million. This represents an annual rate of increase of 28% in each and every one of those 12 years. That saw us outpace all our international competition and establish an enviable track record of economic and trade success. Our beef export dependence on the United States during that period dropped from 90% to less than 70%.

Commercially viable access to our major markets in Asia and Mexico has the ability to add $85 per head in value over what can be generated here in Canada for beef derived from animals under 30 months of age. Further, these markets have the ability to add $100 in additional value over what can be generated for these same products in the United States. It is this export premium that must be accessible to us for our industry to prosper—really, to survive.

Canada's beef and dairy cow herd is estimated at 5.6 million head, with production this year estimated at 1.5 million tonnes. It takes the production from about 3 million cows to meet the beef consumption needs of our domestic market, which is about 1 million tonnes. The Canadian market is an excellent one, but it's simply not large enough to absorb the beef production from our 6-million-head national cow herd. We have to remain focused on deriving full value from international markets. The extent to which we're successful in creating commercially viable access, not only to Asia and Mexico, but to Europe, Russia, Middle East, and South America, will determine the eventual size of our industry.

What lies in the balance is the difference between an industry maintaining some six million cows and one maintaining three million cows. Our industry cannot promote itself through market access barriers.

The mood of our industry is reflected in export goals set each year by our export members. Their view of the achievable is a reflection of market realities. In 2006 our export members set the export goal for the year 2015 at 800,000 tonnes, with 354,000 tonnes going to Asia and Mexico. In 2007, after very little incremental access being earned in the previous year, those export goals were decreased to 650,000 tonnes, with 258,000 tonnes going to Asia and Mexico. And in 2008, after, again, another year with very little new access being earned by our country, export goals were lowered to less than 500,000 tonnes, with just 168,000 tonnes destined for Asia and Mexico. The federation’s members stabilized their 2015 goals at 521,000 tonnes in 2009, with 210,000 tonnes going to all markets outside of the U.S.A.--some possible glimmer of hope being reflected in their long-term plans.

What our export members are telling us with these lowered expectations to 2015 is that, all other things being equal, they're going to process 300,000 fewer tonnes of beef for export. This means that 750,000 fewer head of cattle will be processed in Canada, and either these extra cattle will be exported to the U.S. or our cow herd must drop by 825,000 head. Our members are indicating that it likely will be a combination of both—we'll export more live cattle than anticipated and have a smaller herd.

There is cause for optimism. The federation believes we have reached a turning point and are now on the slow road to recovery. In 2008, world markets for Canadian beef increased 8.4% over the previous year, at 393,000 tonnes. Exports to the federation’s key markets in Asia and Mexico increased 10%, to about 80,000 tonnes, or $300 million, during the same year. Exports to markets outside of the United States again now represent 23% of worldwide beef exports. Our dependency on the U.S. has decreased to 77%.

With the Government of Canada’s announcement on January 9, 2009, that it was acting upon two key recommendations of industry, the outlook for the Canadian cattle and beef industry has become yet more promising. These actions are to create the Agriculture and Agri-Food Canada Market Access Secretariat, and to pursue incremental access that is commercially significant to the industry. Already this new approach to market access is delivering results, with market expansions in Hong Kong and Saudi Arabia. The federation believes that utilizing the Canadian government’s new approach of pursuing incremental access, independent of the timing and terms of U.S. negotiations, in key export markets such as South Korea, mainland China, and Japan, would be of tremendous value to our industry.

I am an optimist. I believe we must do the following: champion a new focus on Canada’s international trading life; modernize Canada’s trade negotiation strategies and philosophies; stimulate the development of a deeply rooted export culture in our industry and governments; rebuild the optimism necessary to process 4.5 million cattle in Canada, with 1.4 million just for Asia and Mexico; and export 800,000 tonnes of beef out of Canada by 2015, with half of that total imported by markets outside the U.S.

It's high time for the Canadian cattle and beef industry to turn its attention from survival to the continued pursuit of growth and prosperity. Trade is a big part of that solution.

Thank you very much.

[The Chair, Conservative, Larry Miller]

Thank you very much, gentlemen.

We'll start our seven-minute round, which will include the questions and answers for each witness.

Mr. Eyking.

[Mark Eyking, Liberal, Sydney—Victoria, NS]

Thank you very much, Mr. Chair.

I thank the guests for coming here today. Over the last few meetings, our committee has been getting quite an insight into the industry, where it's going and where it's coming from.

I have two questions. One deals with the price that beef producers are receiving. Recently we saw a graph showing that eight years ago, producers were getting 25% of the retail dollar of beef. I think right now it's down to 16%. Somebody else is taking the money. Probably retailers are taking a good chunk of it, but also processors are taking a little more than their share.

Why is that happening? Is it maybe because the processors who have feedlots are interfering with the price that the farmers are receiving?

You mentioned selling our beef worldwide and how important it is for Canadian producers, but what seems to be evolving is a bit of a patchwork across this country as far as programs available to beef producers go. We see in Alberta, I think, two programs totalling up to $600 million to help the beef producers. I think B.C. has $12 a head out there.

I'm wondering where our industry is going. Is it going to have this patchwork of programs that are not helping beef producers, or even have some provinces outbidding other provinces in helping their producers, so you're going to see more of a concentration in one area? Is that healthy, and is that the way we should be going as an industry?

Those are the two questions. One is what is happening to the price that farmers are receiving. The other is where our industry is going with the insufficient programs the federal government has. I'd also like to know about the patchwork that's happening across the country in different provinces.

[Brian Read, Chairman, Beef Committee, Canadian Meat Council]

I guess I'll start with the first one.

The packing industry, in general, does not study prices at all. I have a P and L from last year that's now public domain--we're owned by the Quebec cattle producers, as we all know--and my numbers will not contribute to me taking the profits. It's the complete opposite.

Regarding this concern about the reduction to the producers--to 16% of retail value--again, I'm not sure what drives that model, so I'm not willing to get into it, but the packers do not operate on that basis. We operate on a per-head basis. Our volume has been reduced. That's why I'm a little concerned about this number that you've posted publicly. When we reduce the volume in these efficient plants, we're going to lose a minimum $20 a head if we can't fill our capacity. And that's what I look at, our kill capacity; we're not utilizing it.

I apologize that I don't have a black and white answer for you.

[Mark Eyking, Liberal, Sydney—Victoria, NS]

Just to touch up on that answer--because I'm asking the question about the processors who have feedlots--are they interfering with the price that ranchers and farmers are receiving by sometimes backing off on buying from farmers and pulling the price down? Do you see any of that in the industry?

[Brian Read]

I have contact with one who has a big feedlot today; he didn't have it yesterday. It doesn't have an impact on their full kill. It doesn't fill their kill on a weekly basis, nor do they use it for leverage, because when they're ready, they move.

I guess I should turn it over to the producers to see if they feel that way, because I don't see that. I really don't. I think, if anything, it helps the calf sales, does it not? It's a customer.

[Mark Eyking, Liberal, Sydney—Victoria, NS]

I don't mind if somebody else answers, but I want some time left for my second question, too.

[John Gillespie]

Your second question is on provincial programs.

Just to speak to the concept of meat packers owning cattle, as far as we're concerned, we don't think that negatively influences the price. You have to remember that they have to buy those cattle from somewhere. We're cattle producers, and we enjoy selling them to a willing buyer, so that's just another good markup.

We want a consistent kill, or a consistent processing of numbers, in the meat-packing industry. If that inventory of cattle helps smooth out the ups and downs as far as the capacity is concerned, so much better for the viability of the industry. So we don't speak against that.

If you want to speak to the provincial programs in Canada, it's true, that is a major issue. We have a lot of balkanization going on. It's a big issue with us at Canadian Cattlemen's Association, especially with Alberta. They represent the largest volume of cattle in there, and they've been pumping money to their producers, to the disadvantage of all the other producers. We at Canadian Cattlemen's are trying to address that issue, and we think we need some federal leadership on that matter.

But yes, it does greatly disadvantage producers from other provinces.

[Mark Eyking, Liberal, Sydney—Victoria, NS]

On the federal leadership that you require to help have an even playing field across this country--and of course so we can continue to have a strong industry--how do you think the federal government should be playing a lead on that?

[John Gillespie]

We do have the CAIS program, which is common to all provinces. One way is that we can offset that money if the.... If one of the provinces wants to bulk up the money, we can withdraw or delete some of the federal CAIS money that goes into those provinces to make some equalization.

[Mark Eyking, Liberal, Sydney—Victoria, NS]

That's a good point.

[Gib Drury, Board Chair, Canada Beef Export Federation]

Honourable members, speaking from a producer's point of view on the balkanization of programs, I think what the federal government can do, which would actually help us more than anything else, is get us access to these out-of-Canada markets.

They will add more value to our products and put money not just in the producer's pocket, but in the processor's and the exporter's pockets. It pales in comparison with the $40 Saskatchewan gave, or with the $120 Alberta gives. Get us into these foreign markets: do whatever is required to get us access and a lot of the money problems will solve themselves.

[The Chair, Conservative, Larry Miller]

You have about 45 seconds, if you want to use it.

[Mark Eyking, Liberal, Sydney—Victoria, NS]

Ted, do you want to add to that?

[Ted Haney]

This relates to your first question. The time when producers have the highest percentage of Canadian retail revenues is when there is the maximum demand for our products worldwide. In 2002 we had a much higher percentage for producers in the Canadian retail, because we exported 60% of our product outside of Canada, and 20% of our product was actually exported outside of North America. That means the world has the capacity to compete for every muscle and every cut with every player in Canada. That competitive environment put more dollars into the pockets of producers. Trade is a major determinant of that.

When you can't trade, throughput goes down, fixed costs have to be paid, variable costs go up, distribution costs per unit of production go up, and there's less money to go around to all pockets. That just doesn't work for us as an industry. It doesn't work for consumers either.

[The Chair, Conservative, Larry Miller]

Thank you.

Mr. Bellavance, for seven minutes.

[André Bellavance, Bloc, Richmond—Arthabaska, QC]

Thank you.

Mr. Laws, in 2007, this same Committee was already discussing the crisis in the beef industry. During the course of your participation, as a witness in the work of the Committee, you at the time mentioned an issue that you brought up again today, a year and a half later, namely the costs related to inspections, export duties and export certificates. You, among other things, stated back in 2007 that our competitiveness vis-à-vis the Americans was hurting, given that it can cost our producers and our processors up to $20 million more compared with the situation on the American side.

The Committee put forward recommendations in the report that followed its study. We, for example recommended that the Canadian Food Inspection Agency review all of its programs. You stirred my curiosity earlier when you said that you sit with the CFIA on a committee that is presently looking at this very issue.

Where are things at in this regard? What have your discussions been about? Have you seen any improvement since your previous appearance before us and the tabling of the Committee's report? Have there been any notable and tangible changes in this area?

[James Laws]

Indeed, last year, red meat slaughter houses received $2 million back to cover the costs they had paid.

Furthermore, one of the recommendations contained in the report prepared by this Committee with the help of the industry and producers was aimed at eliminating regular hour inspection costs for slaughter houses and following more closely the American model. I am not sure, but I believe that the final report was submitted to the minister of Agriculture and Agri-Food. It is our hope that it will be adopted as is.

Another interesting element flowed from the report. Given that all of the inspection fees are frozen for at least 10 years, they no longer fall under the new performance criteria. An annual performance report to Parliament is clearly required for all new fees approved by the government. If the slaughter houses do not perform to standard, coverage of the fees paid out by the slaughter houses and by all of the users of the agency's services will decrease.

It is our hope that the entire report will be accepted.

[André Bellavance, Bloc, Richmond—Arthabaska, QC]

You are telling us that after the tabling of the report containing all of these recommendations in 2007, discussions took place and the file moved forward. Yet we still today have this disadvantage compared with our American competitors.

[James Laws]

Yes, precisely.